Chapter 1

B

A budget ________. A) is the qualitative expression of a proposed plan of action by management B) is an aid to coordinating what needs to be done to execute a plan C) helps in identifying problems and uncertainties D) promotes production automation

C

A budget serves as much as a control tool as a planning tool because ________. A) it aids in the coordination and communication among various business functions B) it helps to evaluate customer needs and feedback C) it is a benchmark against which actual performance can be compared D) it helps.to make predictions about the future

C

A report showing the actual financial results for a period compared to the budgeted financial results for that same period would most likely be called a ________. A) strategic plan B) management forecast C) performance report D) revised plan

D

A well-conceived plan allows managers the ability to ________. A) not make decisions again until the next planning session B) keep lower-level managers from implementing change C) underestimate costs so that actual operating results will be favorable when comparisons are made D) take advantage of unforeseen opportunities

B

An Enterprise Resource Planning System can best be described as ________. A) a collection of programs that use a variety of unconnected databases B) a single database that collects data and feeds it into applications that support each of the company's business activities, such as purchases, production, distribution, and sales C) a database that is primarily used by a purchasing department to determine the correct amount of a particular supply item to purchase D) a sophisticated means of linking two or more companies to facilitate their planning processes

D

Control measures should ________. A) be set and not changed until the next budget cycle B) be set by excluding nonfinancial information C) be kept confidential from employees so that competitors don't have an opportunity to gain a competitive advantage D) be linked by feedback to help future planning

A

Cost accounting ________. A) measures the costs of acquiring or using resources in an organization B) measures the financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization C) coordinates product design, production, and marketing decisions and evaluate a company's performance D) communicates information to investors, banks, regulators, and other outside parties

C

Customer relationship management initiatives use technology to coordinate all ________. A) advertising and marketing techniques to attract customers B) research activities C) customer-facing activities D) quality control management activities

B

Customer response time involves ________. A) the speed it takes a customer to respond to an advertisement and place an order B) the speed at which an organization responds to customer requests C) the speed it takes to develop a new product D) the speed it takes an organization to develop a Total Quality Management (TQM) program

A

Ethical challenges for management accountants include ________. A) whether to accept gifts from suppliers, knowing it is an effort to indirectly influence decisions B) adhering to the principles of accounting C) whether to file a tax return this year D) whether to accept gifts higher incentives from the company for their performance

B

Financial accounting ________. A) focuses on the future and includes activities such as preparing next year's operating budget B) must comply with GAAP (generally accepted accounting principles) C) is the process of measuring, analyzing, and reporting financial and nonfinancial information related to the costs of acquiring or using resources in an organization D) is prepared for the use of department heads and other employees

A

Financial accounting is concerned primarily with ________. A) external reporting to investors, creditors, and government authorities B) cost planning and cost controls C) product design and marketing strategies D) providing information for strategic and tactical decisions

A

Financial accounting provides a historical perspective, whereas management accounting emphasizes ________. A) the future B) past transactions C) a current perspective D) reports to shareholders

C

Financial accounting provides the primary source of information for ________. A) decision making in the finishing department B) improving customer service C) preparing the income statement for shareholders D) planning next year's operating budget

C

If there is an ethical conflict concerning your direct supervisor, when is it appropriate to contact authorities or individuals not employed by the organization? A) when there is a personal conflict B) when your supervisor is about to be promoted C) when there is a clear violation of the law D) when you face injustice from your supervisor

D

If there is an ethical conflict concerning your direct supervisor, you may contact ________. A) local media B) IMA Ethics Counselor C) attorney D) board of directors

B

In a cost-benefit approach, managers should spend resources if the ________. A) marginal costs to the company exceed the marginal benefits B) expected benefits to the company exceed the expected costs C) marginal costs to the company equal the marginal benefits D) expected benefits to the company equal the expected costs

B

In designing strategy, a company must match its opportunities in the marketplace with ________. A) environment friendly goals B) its resources and capabilities C) branding opportunities D) the requirements of credit rating agencies

A

Line management includes ________. A) distribution managers B) human-resource managers C) information-technology managers D) management-accounting managers

D

Linking rewards to performance ________. A) helps to motivate managers B) allows companies to charge premium prices C) should only be based on financial information D) enhances agency costs

A

Long-term financing is an integral part of the ________ function in an organization. A) CFO's B) controller's C) auditor's D) president's

A

Management accounting ________. A) focuses on estimating future revenues, costs, and other measures to forecast activities and their results B) provides information about the company as a whole C) reports information that has occurred in the past that is verifiable and reliable D) provides information that is generally available only on a quarterly or annual basis

A

Management accounting information helps managers calculate a target cost for a product ________. A) by subtracting from the target price the operating income per unit of product that the company wants to earn B) by subtracting from the target price the net income per unit of product that the company wants to earn C) by subtracting profit margin per unit from the target price of product that the company wants to earn D) by adding the operating income per unit and the contribution margin per unit

D

Management accounting information typically includes ________. A) tabulated results of customer satisfaction surveys B) the cost of producing a product C) the percentage of units produced that are defective D) All of these answers are correct.

C

Management accounting is considered most likely to be successful when it ________. A) helps creditors evaluate the company's performance B) helps investors improve their decisions C) is timely D) is relevant and reported annually

B

Managers use management accounting information to ________. A) help external users such as investors, banks, regulators, and suppliers B) communicate, develop, and implement strategies C) communicate a firm's financial position to investors, banks, regulators, and other outside parties D) ensure that financial statements are consistent with the SEC rules

D

Marketing is the ________. A) generation of, and experimentation with, ideas related to new products, services, or processes B) detailed planning and engineering of products, services, or processes C) acquisition, coordination, and assembly of resources to produce a product or deliver a service D) the manner by which companies promote and sell their products or services to customers or perspective customers

C

New-product development time is the time taken by companies to ________. A) test the prototype and start the large scale production of a product B) design and develop the prototype product C) create new products and bring them to market D) improvise existing products and re-launch them to market

C

Place the five steps in the decision-making process in the correct order: A = Obtain information B = Make decisions by choosing among alternatives C = Identify the problem and uncertainties D = Implement the decision, evaluate performance, and learn E = Make predictions about the future A) C D B E A B) E D A B C C) C A E B D D) A E B D C

C

Place the four business functions in the order they appear along the value chain: Customer service Design Marketing Production A) Customer Service, Design, Production, Marketing B) Customer Service, Marketing, Production, Design C) Design, Production, Marketing, Customer Service D) Design, Customer Service, Production, Marketing

B

Processing orders and shipping products or providing services to customers is known as ________. A) after-sales services B) distribution C) marketing D) supply chain

C

Production is the ________. A) generation of, and experimentation with, ideas related to new products, services, or processes B) processing orders and shipping products or services to customers C) acquisition, coordination, and assembly of resources to produce a product or deliver a service D) detailed planning and engineering of products, services, or processes

A

R&D, production, and customer service are business functions that are all included as part of ________. A) the value chain B) benchmarking C) customer relationship management D) the supply chain

B

Staff management includes ________. A) manufacturing managers B) management accountants C) purchasing managers D) distribution managers

A

Strategy is formulated ________. A) by identifying the most important customers B) by forecasting the composition of adequate fixed assets C) based on the qualified opinion of external auditors D) by eliminating sunk costs

A

Strategy specifies ________. A) how an organization matches its own capabilities with the opportunities in the marketplace B) standard procedures to ensure quality products C) incremental changes for improved performance D) the demand created for products and services

A

Technical consideration ________. A) help managers make wise economic decisions by providing them with the desired information B) focus on encouraging individuals to do their jobs better C) focus on compensating the managers for good performance D) emphasize on different costs for different purposes

B

The Standards of Ethical Conduct for management accountants include concepts related to ________. A) competence, performance, diligence, and reporting B) competence, confidentiality, integrity, and credibility C) experience, diligence, reporting, and objectivity D) diligence, objectivity, conflicts of interest, and credibility

B

The ________ function supports the six functions of value-chain analysis. A) administration B) controlling C) planning D) direction

D

The ________ is primarily responsible for management accounting and financial accounting. A) COO (Chief Operating Officer) B) CIO (Chief Information Officer) C) treasurer D) controller

C

The approaches and activities of managers in short-run and long-run planning and control decisions that increase value for customers and lower costs of products and services are known as ________. A) value chain management B) enterprise resource planning C) cost management D) customer value management

D

The most important planning tool is a ________. A) performance evaluation report B) fishbone diagram C) control chart D) budget

C

The primary user of financial accounting information is a ________. A) factory shift supervisor B) distribution manager C) current shareholder D) department manager

A

The primary user of management accounting information is a(n) ________. A) the controller B) a shareholder evaluating a stock investment C) bondholder D) external regulator

A

The scenario that resources should be spent if the expected benefits to the company exceed the expected costs describes ________. A) cost-benefit approach B) behavioral and technical considerations C) balanced scorecard D) different costs for different purposes

D

The value chain is the sequence of business functions in which ________. A) value is deducted from the products or services of an organization B) producing and delivering the product or service is of prime importance C) products and services are evaluated with respect to their value to the supply chain D) usefulness is added to the products or services of an organization

A

Which item is an indication of competence under the Standards of Ethical Conduct? A) Maintain an appropriate level of professional expertise by continually developing knowledge and skills. B) Keep information confidential except when disclosure is authorized or legally required. C) Abstain from engaging in or supporting any activity that might discredit the profession. D) Refrain from engaging in any conduct that would prejudice carrying out duties ethically.

D

Which item is an indication of credibility under the Standards of Ethical Conduct? A) Maintain an appropriate level of professional expertise by continually developing knowledge and skills. B) Refrain from using confidential information for unethical or illegal advantage. C) Abstain from engaging in or supporting any activity that might discredit the profession. D) Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.

A

Which item is an indication of integrity under the Standards of Ethical Conduct? A) Refrain from engaging in any conduct that would prejudice carrying out duties ethically. B) Communicate information fairly and objectively. C) Keep information confidential except when disclosure is authorized or legally required. D) Recognize and communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity.

B

Which of the following deals with management accounting? A) identifying the costs of acquiring the resources of the company B) developing budgets C) preparing the income statement D) preparing the statement of cash flows

B

Which of the following differentiates confidentiality and credibility under the Standards of Ethical Conduct? A) Credibility deals with refraining from activities that would prejudice carrying duties ethically, while confidentiality deals with communicating information fairly and objectively. B) Confidentiality deals with refraining from the usage of critical information for unethical or illegal advantage, while credibility ensures disclosing the relevant information that would help the intended user's understanding. C) Credibility deals with refraining from the usage of critical information for unethical or illegal advantage, while confidentiality ensures disclosing the relevant information that would help the user's understanding. D) Credibility ensures appropriate level of professional expertise by continually developing knowledge and skills, while confidentiality encourages mitigation of actual conflicts of interest.

D

Which of the following differentiates cost accounting and financial accounting? A) The primary users of cost accounting are the investors, whereas the primary users of financial accounting are the managers. B) Cost accounting deals with product design, production, and marketing strategies, whereas financial accounting deals mainly with pricing of the products. C) Cost accounting measures only the financial information related to the costs of acquiring fixed assets in an organization, whereas financial accounting measures financial and nonfinancial information of a company's business transactions. D) Cost accounting measures information related to the costs of acquiring or using resources in an organization, whereas financial accounting measures a financial position of a company to investors, banks, and external parties.

A

Which of the following differentiates marketing from customer service? A) Marketing is the process of promoting and selling products or services to customers or prospective customers, whereas customer service is the process of providing after-sales service to customers. B) Marketing is the process of processing orders and shipping products or services to customers, whereas customer service is the process of providing additional information to customers about the product. C) Marketing is the process of detailed planning, engineering, and testing of products and processes, whereas customer service concentrates on existing customers. D) Marketing is the process of processing orders and shipping products or services to customers, whereas customer service is concerned with choosing the right customer for the product.

A

Which of the following groups would be least likely to receive detailed management accounting reports? A) stockholders B) sales managers C) production supervisors D) distribution managers

A

Which of the following is a function of a controller? A) operations administration B) controlling the stock price C) communication with the shareholders D) interest-rate risk management

A

Which of the following is a guideline used by management accountants to assist in strategic and operational decision making? A) employing a cost-benefit approach B) employing a supply chain approach C) employing a six sigma approach D) employing a regression approach

B

Which of the following is a responsibility of the CFO? A) budget funds for a plant upgrade B) managing short-term and long-term financing C) investing in new equipment D) conducting internal audit

B

Which of the following is an area that customers want to see improved levels of performance? A) higher sales margin B) quality of the product C) lower marginal costs D) profit margins

C

Which of the following is an example of an extrinsic reward? A) receiving a high rating on customer service B) appreciation mail from a customer C) promotions based on performance D) verbal appreciation from CEO

B

Which of the following is an example of an intrinsic reward? A) bonuses paid to employees B) recognition of job well done C) promotions based on performance D) salaries paid to employees

C

Which of the following is not a concern for management accountants in formulating a strategy? A) identifying the most important warehouse location for the distribution of goods B) substituting products that exist in the marketplace C) strategizing compliance with GAAP (Generally Accepted Accounting Principles) D) maintaining adequate fixed assets available to implement the strategy

A

Which of the following is true of a budgeting system? A) It compels managers to plan ahead. B) It increases agency costs. C) It is easy to measure the exact benefits of a budgeting system. D) It leads to operational inefficiency.

C

Which of the following is true of cost accounting? A) It provides financial information about cash-based transactions only. B) It accounts only the financial information of business transactions, not the nonfinancial information. C) It provides financial information regarding the cost of acquiring resources. D) It must be prepared in accordance with GAAP.

C

Which of the following is true of financial accounting information? A) It is prepared based on cost-benefit analysis. B) It is primarily used by managers to make internal business decisions. C) It focuses on the past-oriented financial performance of a company. D) It only measures the cash transactions of a company.

A

Which of the following is true of line management? A) It is directly responsible for achieving the goals of the organization. B) It is responsible of management accounting functions. C) It provides advice, support, and assistance to staff management. D) It only includes the top level management.

D

Which of the following is true of management accounting information? A) It focuses on documenting past business actions of a firm. B) It is prepared based on SEC rules and FASB accounting principles. C) It is prepared for shareholders. D) It co-ordinates product design, production, and marketing decisions.

A

Which of the following is true of planning in decision making? A) It helps an organization to select goals and strategies. B) It improves the quality of products. C) It helps in evaluating performance. D) It helps in the analysis of actual performance.

A

Which of the following is true of planning? A) It makes predictions about the future. B) It assumes the functional hierarchy of any business is linear. C) It improves the quality of products. D) It evaluates customer feedback

C

Which of the following is true of staff management? A) It plans income taxes, sales taxes, and international taxes. B) It is directly responsible for achieving the goals of the organization. C) It provides advice, support, and assistance to line management. D) It controls the main business functions such as production and marketing.

C

Which of the following is true of sustainability? A) It helps in implementing strategies to improvise the product. B) It concerns with purchase of material in larger quantities. C) It helps the development and implementation of strategies to achieve long-term financial, social, and environmental goals. D) It helps manufacturing firms produce products more efficiently ensuring lower costs at an optimum use of available resources.

C

Which of the following issues is addressed by the Sarbanes-Oxley legislation? A) safety aspects of products B) environmental damages caused by industries C) disclosure practices of public corporations D) disclosure practices of private companies

D

Which of the following reports to the CFO? A) external auditor B) distribution manager C) production manager D) treasurer

D

Which of the following statements about a company's supply chain is true? A) A company's supply chain is always internal to a firm. B) A company's supply chain is always external to a firm. C) A company's supply chain is the same thing as a company's value chain. D) Management accountants provide information to enhance a company's supply chain.

B

Which of the following statements about customer value is true? A) Customer value is shown in a corporation's balance sheet. B) Creating value for customers is an important part of planning and implementing strategy. C) Customer value is the only focus that helps managers to formulate strategies. D) Customer value is lost with increase in costs of the product.

B

Which of the following statements about the cost-benefit approach is true? A) Resources should be spent if the expected costs exceed the expected benefits of the company. B) In a cost-benefit analysis, both costs and benefits are not easy to measure. C) Resources should be spent if the costs of a decision outweigh the benefits of the decision. D) A cost-benefit approach would not be appropriate for a decision to install a budgeting system.

A

Which of the following statements concerning an organization's strategy is true? A) Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives. B) Cost accountants formulate strategy in an organization since they have more inputs about costs. C) A good strategy will always overcome poor implementation. D) Businesses usually follow one of two broad strategies: offering a quality product at a high price, or offering a unique product or service priced lower than the competition.

A

Which of the following statements is true of performance reports? A) The performance report shows actual performance as compared to the budget. B) The performance report depicts the performance of a firm's competitors. C) The performance report compares only the budgeted performance over the years. D) The performance report contains no actual results due to confidentiality.

A

Which of the following statements refers to management accounting information? A) There are no regulations governing the reports. B) The reports are generally delayed and historical. C) The audience tends to be stockholders, creditors, and tax authorities. D) It primarily measures manager's compensation on reported financial results.

A

________ aims to improve operations throughout the value chain and to deliver products and services that exceed customer expectations. A) Total Quality Management B) Innovation C) Customer response time D) Cost and efficiency

A

________ describes the flow of goods, services, and information from the purchase of materials to the delivery of products to consumers, regardless of whether those activities occur in the same organization or with other organizations. A) Supply chain B) Production process C) Quality control D) Customer relationship management

D

________ includes banking and short- and long-term financing, investments, and cash management. A) Risk management B) Strategic planning C) Controllership D) Treasury management

C

________ includes providing financial information for reports to managers and shareholders, and overseeing the overall operations of the accounting system. A) Risk management B) Treasury management C) Controllership D) Strategic planning

D

________ is a philosophy in which management improves operations throughout the value chain to deliver products and services that exceed customer expectations. A) Cost-benefit approach B) Customer focus C) Customer relationship management D) Total quality management

B

________ is a strategy that integrates people and technology in all business functions to enhance relationships with customers, partners, and distributors. A) Supply-chain analysis B) Customer relationship management C) Value-chain analysis D) Continuous quality improvement

B

________ is an after-sale support provided to customers. A) Distribution B) Customer service C) Production D) Marketing

B

________ is the detailed planning and engineering and testing of products, services, or processes. A) Plan of implementation B) Design C) Production D) Research and development

A

________ is the generation of, and experimentation with, ideas related to new products, services, or processes. A) Research and development B) Design of products, services, or processes C) Production D) Marketing